Tariff Turbulence: The End of Inexpensive Apparel

This Week’s Focus: The End of Cheap Fashion

The era of cheap, disposable fashion is facing a potential end as President Trump introduces significant import taxes across the board. These measures, intended to boost domestic manufacturing and address trade imbalances, are set to dramatically increase clothing prices, which have largely remained unchanged since the 90’s. Consumers, used to low-cost apparel, might soon have to reevaluate their purchasing decisions, moving from abundance to frugality, while ironically, this shift could align the interests of industrial enthusiasts and sustainability advocates, promoting a move toward a mix of onshoring and nearshoring of U.S. apparel production and reduced waste. However, will the hope for a major revival in domestic textile jobs really materialize or will the inevitable increase in prices and today’s intense manufacturing automation diminish the current administration’s intentions?

For decades, Americans have enjoyed the sacred tradition of impulse-buying piles of $5 shirts without ever stopping to wonder, “Is it normal that my coffee costs more than my clothes?”

But the golden days of disposable fashion and overflowing closets may soon be coming to an end. With President Trump’s announcement of import taxes of varying degrees on every country (including an eye-watering 34% on China), the era of blissful clothing shopping sprees is crashing headlong into economic reality.

Now, you’ll either have to pay a premium for your next pair of jeans, or finally learn how to patch that hole.

Trump insists that tariffs will resurrect factory jobs and halt decades of what he calls “looting, pillaging, and plundering” by trade partners. And while this may be debatable, one thing is certain: consumers accustomed to buying clothes at prices lower than their lunch are about to experience sticker shock so severe, their closets might actually thank them.

I know what you’re thinking—we have bigger problems (inflation, diplomatic relations with partnering countries, etc.). However, this newsletter prides itself on taking specific issues, studying them in detail, and shedding light on them with a more rigorous and academic approach.

So, buckle up—preferably with a domestically produced belt—because cheap fashion has officially left the building.

Declining Real Prices: A 25-Year Era of Cheap Fashion

For the past quarter-century, apparel prices in the U.S. have been on a remarkable downward trajectory in real terms. While overall consumer prices have roughly doubled since 1990, clothing costs barely budged. The Bureau of Labor Statistics shows that the consumer price index (CPI) for apparel rose about 3.5% from 1990 to 2025—compared to ~140% inflation for all goods.

In other words, a basket of clothes that cost $20 in 1990 costs approximately $20.70 today. The chart below illustrates this divergence—apparel prices (orange line) essentially stayed flat, even as the broad CPI (yellow line) climbed sharply, meaning clothes became dramatically cheaper in real terms.

Multiple factors contributed to this:

First, production offshored to low-wage countries en masse. In 1990, the U.S. still had over 900,000 apparel manufacturing jobs; today fewer than 100,000 remain. Currently, more than 97% of clothing sold in the U.S. is imported. This globalization allowed brands to drastically cut costs by tapping into labor often 10-20 times cheaper than in North America.

Second, the rise of fast fashion. Firms like Zara and H&M developed ultra-lean supply chains to churn out new styles at lightning speed and low cost—a model further refined by Shein and Temu, the Chinese ultra-fast retailers.

Third, trade liberalization systematically removed barriers. The North American Free Trade Agreement (1994) and China’s WTO entry (2001) opened floodgates for imports. Critically, the expiration of the Multi-Fiber Arrangement quotas in 2005 eliminated decades-old limits on apparel exports from developing countries. After quotas ended, China’s apparel shipments to the U.S. jumped over 1000% in some categories virtually overnight, sending import prices plunging. All these factors translated into a relentless downward pressure on garment prices.

Unfortunately, the domestic textile-apparel supply chain was dismantled in the process.

As an American shirtmaker explains in an Axios article, “...there’s no reliable domestic production of thread, sewing machines, high-quality fabrics, or anything else he needs to buy.”

This makes today’s low apparel prices truly a product of global supply networks—with little local fallback.

The Fast Fashion Feed-Back Loop: Cheap Clothes, More Consumption

American consumers responded predictably: they bought more.

Over the past 20 years, inflation-adjusted garment prices dropped roughly 50%, while unit consumption almost doubled. In other words, as clothing became cheaper, Americans didn’t save money, they simply filled their closets with twice as many items. Fast fashion’s model encourages this churn: constant new collections and $5 t-shirts entice shoppers to treat clothes as near-disposable. Total U.S. apparel import volume rose significantly from the 1990s, reaching about $78 billion imports in 2023 (aside from the 2020 pandemic dip). Major retailers built fortunes on this high-volume, low-margin strategy, where a shirt might cost $3 to make in Bangladesh and sells for $10 at Walmart.

While consumers benefited overall, the side effects are real: garment quality and durability declined as brands optimized for cost, while landfills are filling up with barely-worn clothes. Environmental and labor advocates have long bemoaned the social and ecological toll of this throwaway mentality.

Thus, as we consider the end of an era, it’s notable that both ends of the political spectrum see some silver linings: nationalists resent offshoring and the industrial decline, and progressives criticize fast fashion’s sweatshop and waste issues. A shift toward pricier clothing could ironically please MAGA industrialists and sustainability advocates alike. The real horseshoe theory.

But what would drive such a shift?

Tariff Shock: Reversing the Trend with Trade Policy

On April 2nd, a day President Trump dubbed “Liberation Day,” the administration officially announced a dramatic restructuring of U.S. trade policy.

Trump’s new tariffs impose a 10% baseline import tax on all countries, and significantly higher duties for nations running large trade surpluses with the U.S. More specifically, apparel imports now face a startling 34% from China, 20% from the E.U., 25% from South Korea, 24% from Japan, and 32% from Taiwan.

Given that over 90% of clothing sold in the U.S. is imported—much from tariff-targeted regions like China—these measures amount to a seismic price shock for the apparel sector, and analysts predict this will abruptly halt the ongoing price trend. Previously modeled scenarios by the National Retail Federation (NRF) suggested that even a uniform 10–20% tariff would raise average U.S. retail clothing prices by roughly 12.5%. But with the current administration’s tariff schedule the price hikes could exceed 20–25% on average, depending on sourcing exposure. A pair of jeans currently priced at $80 might now cost between $96 and $100 or more!

The expectation is that American consumers will bear the brunt of this policy shift. Previous NRF estimates placed consumer losses between $14 and $24 billion annually. The new, steeper duties will magnify these losses considerably. With tariffs explicitly designed to be too large for retailers to absorb, price-sensitive households will likely face difficult purchasing decisions, triggering reduced demand across the apparel sector. Discount chains and fast-fashion brands, whose models depend heavily on ultra-low prices, will suffer most acutely. Middle-market apparel might also feel the squeeze as consumers rebalance budgets toward essentials.

From a broader macroeconomic perspective, this tariff escalation is significantly inflationary. Economists previously estimated that moderate tariff regimes could raise core CPI inflation approximately from 2.7% to 4.0%. The latest announcement—particularly the unprecedented 34% China tariff—could push apparel’s contribution to CPI even higher, potentially adding up to half a percentage point or more to headline inflation.

Such an increase may compel the Federal Reserve to tighten monetary policy (which some claim is the main reason for these steep tariffs). The costlier jeans could indirectly make mortgages, auto loans, and credit card balances more expensive, reminding us how global trade and everyday financial realities are interconnected.

Reshoring and Supply Chain Shake-Up: Is Made-in-USA Coming Back?

The main rationale behind tariffs is to incentivize companies to bring manufacturing back home.

In theory, if imports become pricier across the board, the playing field tilts back toward domestic production. We can expect some reshoring or near-shoring of apparel supply chains, but there are serious structural constraints on how much (and how fast) production can realistically return to the U.S.

After 30 years of offshoring, domestic apparel capacity and expertise are almost non-existent. As mentioned earlier, only ~2.5% of apparel purchased in the U.S. is even made in the U.S. today. The supply chain “ecosystem”—fabric mills, dye houses, trim suppliers, skilled sewing operators—has largely disappeared. Rebuilding this will take years.

Even if brands wanted to pivot to “Made in USA” to avoid tariffs, they would face shortages of inputs and machinery. Mitch Gambert, who runs a custom shirt factory in New Jersey, lamented that only corrugated boxes were U.S.-made in his supply chain—everything else from thread to fabric must be imported. Tariffs on raw materials would raise his costs just as much as tariffs on finished shirts, leaving little advantage. As he bluntly concludes, uniform tariffs “wouldn’t help” domestic manufacturers in his segment.

Many firms tried to preempt tariffs by moving from China to Vietnam but the problem was that Vietnam was hit with 46% tariffs. And the reality is that the universal tariff (10-60% on all countries) leaves fewer arbitrage options. Even Mexico and Canada, normally tariff-exempt via USMCA, were threatened with new 25% tariffs in Trump’s rhetoric. This implies nearshoring (to Latin America) would also incur tariffs, though perhaps logistics advantages could make it appealing for speed-to-market.

In practice, apparel firms will likely pursue a mix of strategies:

Diversified sourcing across more countries to mitigate risk. Even if tariffs hit all imports, spreading production can help avoid non-tariff shocks (political, climate, etc.). We may see a more distributed import portfolio, reversing some of the China-centric consolidation of the 2000s (China’s share of U.S. apparel imports has already fallen from ~42% in 2017 to ~27% in recent years). Currently the top 4 suppliers—China (~27% of import value), Vietnam (14%), Bangladesh (9%), and India (8%)—account for nearly 60% of U.S. apparel imports. Those percentages could shift as companies hedge bets on tariffs by ordering more from Vietnam or Turkey. Still, collectively Asia will remain dominant. Even with diversification, over 80% of U.S. clothing is likely to continue coming from Asian producers under any foreseeable tariff scenario, at least in the short-to-medium term.

Optimized tariff engineering. Firms used to exploit rules like tariff classification engineering, use of duty-free zones, or the de minimis loophole (direct-to-consumer shipments under $800) to minimize duties. Notably, e-commerce giants like Shein have been shipping cheap clothes directly to U.S. customers duty-free under de minimis rules. Trump closed this loop, but other loops may be discovered or created.

Passing costs through and adjusting volumes. Ultimately, many brands will accept tariffs as the new cost of doing business and simply raise retail prices accordingly (as the NRF analysis predicts). They’ll then monitor how much demand drops. Some product categories might see relatively inelastic demand (e.g., niche luxury apparel could pass along price hikes with minimal volume loss), but basics in the mass market could see sharper volume declines as lower-income consumers pare back purchases.

Thus, global supply chains won’t vanish, but they will reconfigure. We might call it a partial de-globalization of apparel: not a return to 1960s self-sufficiency, but a retreat from hyper-optimized global sourcing. Expect somewhat shorter, more regional supply chains—for example, more U.S. brands working with factories in this hemisphere (Central America, Mexico) for quicker turnaround, even if it’s not fully domestic. However, those regions still have far higher labor costs than Bangladesh, so the net result is still higher prices. In essence, tariffs exchange cost efficiency for resiliency and localism in supply chains.

Automation and the Myth of Manufacturing Jobs Bonanza

One often-heard promise is that tariffs will bring back apparel manufacturing jobs for American workers. Any repatriated production, however, is likely to be highly automated—meaning few jobs relative to output. So even if factories return, the apparel industry of the 1960s (rows of seamstresses sewing shirts) will not be reanimated in the 2020s.

Experts highlight that modern factories will no longer create large-scale employment, as automation significantly reduces the number of workers needed.

Advanced manufacturing techniques such as automated “sewbots” can now cut and stitch a basic T-shirt in about 4 minutes. One such robot line can reportedly make a T-shirt every 50 seconds—equivalent to the output of dozens of human workers. Footwear assembly is also being revolutionized by 3D printing. Adidas recently showcased a 3D-printed sneaker that could, in theory, be produced locally on demand. These technologies drastically reduce the labor-input per unit of apparel.

Given the industry’s thin margins, automation is the only way to make domestic production viable at scale, regardless of tariffs. So while tariffs may spark investment in U.S. apparel manufacturing tech, the jobs payoff would be limited and we shouldn’t expect any significant immediate shift in output. We might see an increase in employment—staffing for automated facilities, engineers for 3D knit machines, etc.—but it will likely be modest and require a different skill set than traditional garment sewing.

So the scenario to envision is not a massive rehiring of displaced garment workers but a handful of futuristic facilities outputting apparel with minimal labor.

From Abundance to Frugality? Potential Consumer and Industry Outcomes

If the era of ultra-cheap apparel truly comes to an end, American consumer behavior may adjust significantly. With prices rising, the frenetic overconsumption of fast fashion could slow down.

I’ve previously addressed how negligent we are with the amount of waste we create with apparel. Tariffs that raise prices might force consumers to buy less, and also return or dispose of less.

We could see a resurgence of interest in quality over quantity—consumers investing in a few durable pieces rather than dozens of throwaway items and, in turn, the apparel industry shifting focus from pure volume to value and longevity. There could also be a boost for resale, rental, and repair services, as increased new clothing prices will make secondhand and extended use more attractive.

Essentially, a re-pricing of clothing could unwind the “unit consumption doubled” phenomenon and bring per-capita apparel purchases back down closer to historical norms. This would mean a leaner market, but potentially one with higher average unit value and perhaps better sustainability metrics (less waste).

From an industry standpoint, higher apparel prices could lift revenue per unit, but volume contraction means firms must adapt. Fast-fashion giants like Shein or H&M, built on razor-thin margins and massive turnover, would need to tweak their models—possibly producing slightly fewer styles and betting consumers will still come for novelty even at higher prices. Luxury brands might find a broader audience willing to “buy less, but buy better,” while mid-tier brands could struggle as some customers trade down (fewer people can afford $50 jeans, so they'll settle for $30 ones). We might also see brand consolidation, as tougher conditions often squeeze out weaker players. Retailers able to vertically integrate or who already have domestic supply elements (however small) might weather the transition better.

On the international front, global apparel trade flows would adjust. Countries like Bangladesh and Vietnam, heavily dependent on U.S. apparel demand, could face economic headwinds if American import volumes drop even though part of production might pivot to serving Europe or other emerging markets. Ironically, countries could also respond with their own tariffs or strategies in a tit-for-tat, though apparel exporters have limited leverage. In any case, a U.S. retreat from being the world’s clothing buyer of last resort would reverberate across Asia.

Conclusion: Higher Costs, Different Choices

After decades of 0% apparel inflation, Americans should brace for clothing to finally become more (or much more) expensive. Real garment prices could partially rebound, eroding some of the tremendous consumer surplus generated by globalization.

If the 10-60% tariffs remain, apparel price inflation could spike into the double digits for a year or two, as the market adjusts, and after that, the annual price changes might stabilize at a modest positive rate (instead of the slight negatives of the past). Meanwhile, the macroeconomic impact would be higher inflation and potentially a one-time consumption drag (as households spend an extra $20+ billion on apparel instead of other goods).

The supply chain restructuring will most likely be a hybrid outcome of some onshoring (mostly automated), extensive nearshoring and diversification, and unavoidable price pass-through to consumers. U.S. production of apparel may increase from the current ~2.5% of consumption to 5–10% over a decade, provided significant investments are made—a meaningful shift, but still far from self-sufficiency. Claims that this will rejuvenate domestic textile employment are, at best, overstated—given modern production methods—while a slowdown in the churn of ultra-cheap apparel might benefit society through less waste and perhaps a reevaluation of clothing as something to care for rather than to dispose of.

In short, tariffs would trade cheaper prices for structural change. The end of cheap clothing may feel like a loss to consumers, but it will fundamentally reorder supply chains that have been taken for granted. We can expect fewer “5 for $10” fast-fashion hauls, and perhaps the resurgence of appreciation for a well-made garment.

The apparel sector is entering a new chapter—one where economic efficiency is weighed against resilience, and where the true cost of a $5 T-shirt may finally be reckoned with.